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Gifts for kids often don't last much longer than the wrapping paper. ("I broke it!") But a present that can help get a young person started down the right financial path will stay relevant for years.
We've pulled together a wide variety of gift ideas that make financial literacy fun! You'll be giving something guaranteed not to wind up in the trash after a few hours, plus you'll be doing your part to raise the next generation of savvy savers and informed investors.
1. Savings bonds
Savings bonds make excellent gifts for kids, especially those who are too young to be tempted to cash them in any time soon.
The bonds are more or less loans you make to the U.S. government, in this case in the child's name. They can be redeemed any time after 12 months, but cashing them too soon can mean lost interest and even penalities.
Series EE or I savings bonds will earn interest for up to 30 years. You can buy them online at TreasuryDirect.gov.
2. Money for college
Though young children won't understand what it means if you open or contribute to their 529 college savings plan, they'll thank you years later at high school graduation time.
And really, it's never too early to start talking to kids about the value of education, to help set them on the right track for their future.
These plans have tax advantages and are offered by states. You can either save and invest a pile of money for a child's higher education, or prepay for tuition at a participating school.
3. A share of stock
What's a better way to teach kids about the stock market than to make them actual shareholders?
You can get a frameable stock certificate, either a genuine one or a replica (since many companies no longer issue paper stock certificates). Kids will be excited to say they own part of a company and will enjoy watching their stock grow over time.
4. Savings account
A piggy bank is fine for little kids, but once they get older a savings account is a great way to teach them how banking works.
Make sure you find a bank that offers free accounts, without minimum balance requirements or hidden fees. You may even find a savings account that pays decent interest, especially if you look to credit unions or online banking.
You'll likely be required to sign on as a co-owner of the account until your child is old enough to take complete control.
5. Investing account
Another great way to get children interested in the stock market is to open an investing account as a gift.
An automated investing service like Wealthsimple takes all of the work out of it for kids: It automatically rebalances an account's investments to protect a portfolio from changing market conditions.
Wealthsimple offers trusts and custodial accounts for children that adults can set up and watch over. A youngster can't make a withdrawal from an account until the "age of majority" in your state, usually 18.
6. Kiva gift card
A gift card for Kiva — the microlending platform — is a great way to show a child how to use money to make the world a better place.
Kiva makes small loans to help people in developing countries improve their lives. A kid armed with a $25 Kiva card could look through the site and select a cause to support with the gift.
Over time, each lender is repaid and can use their money to make a new loan to help fund another cause.
7. Certificate of deposit (CD)
If you'd like a stable way to save for your child's future, then a certificate of deposit is an excellent option.
Not only are CDs a smart way to stash away savings for kids, but they also tend to come with higher interest rates than savings accounts.
CDs have terms ranging from a few months to several years. Generally, the longer the money is held, the better the interest. There are penalties if the money is withdrawn before the end of the term.
8. An old-fashioned board game
One of the easiest ways to make learning about money fun is to turn it into a game.
Old-school board games like Monopoly and Life are perfect for this — they've been giving kids crash courses in finance for generations. If you play along, take the time to explain the underlying concepts about banking, investing and budgeting.
Telling kids how the game has real-world implications may make it even more engaging.
9. Life insurance
Life insurance may seem like a very odd gift choice for a child, since policies are typically sold to pay funeral expenses and offer financial protection to survivors if the insured person dies unexpectedly.
But fans of the idea of buying coverage for kids say a permanent life insurance policy can build up thousands of dollars in "cash value" that could come in very handy when a child is grown.
Even so, a much better use of life insurance where kids are concerned is for parents to make sure they have enough coverage to keep their loved ones financially secure if the unthinkable happens.
It may seem a bit impersonal, and it's not a gift children can play with. But giving cash can — obviously — be an excellent way to teach kids about money.
Rather than just handing out a $20 bill and telling a child to go buy something nice, give bills in various denominations and talk about all the possible ways of spending and budgeting the money.
You may want to pair the cash gift with a small bank or coin counter, so that soon-to-be-savvy kid on your list can learn to value and keep track of his or her funds.
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